Keep cost per use in mind when shopping

$500 coat might be a good value if you wear it often

Is a $150 pair of jeans a better deal than a $50 pair? Is a $60-per-month gym membership worth it? Should you spend $20 more for a better coffee maker?

The answer is, of course, it depends. One way to evaluate a purchase is to estimate its cost per use, rather than focus on the purchase price.

Simply divide the purchase price by the number of times you'll use the item. And be conservative; academic studies show that consumers, especially if they're excited about a purchase, tend to overestimate use.

Still, it's a great aid in deciding whether to buy an item, comparing possible purchases, evaluating an upgrade in a product or deciding between subscribing or paying as you go.

"Tracking or estimating use is the best first step," said Jim Wang, creator of personal finance site Bargaineering.com. It "puts hard numbers to something that's qualitative in your mind."

Cost per use doesn't work for everything. For example, you use life insurance only once, making its cost incalculable. But here are a few examples of how calculating a cost per use can help.

Clothing: Kathryn Finney, author of "How to be a Budget Fashionista" and online at TheBudgetFashionista.com, recommends calculating a cost per wear of a garment before buying it. The more you wear it, the lower he cost.

She gives the example of a $500 winter coat that you wear 100 to 150 times per year over five years. That costs 67 cents to $1 each time you wear it. But if you buy a trendy top for $20 at Old Navy and wear it only three times, it costs you $6.67 per wear. That makes a $20 top six times more expensive than a $500 coat.

Value, not low prices, should be your focus when shopping, she says.

Subscriptions: Consider a DVD movies-by-mail subscription, such as Netflix. Is it the best option for you, compared with going to the video store, using pay per view from your TV package or paying for a movie channel, such as HBO? Those aren't exactly an apples-to-apples comparison, but cost per use can help you evaluate them.

With Netflix, you pay a flat fee and keep movies as long as you want, but you don't get another DVD until you return one. The faster you watch them and ship them back, the lower your cost per movie.

In the case of Netflix, a handy online tool is available free at FeedFliks.com. It can link with your Netflix account and report on your use, including cost per movie. That makes it easy to compare Netflix to a video-store rental and pay-per-view movie.

Rarely watch movies in the summer or going on a long vacation? Lower your cost per movie by putting your Netflix membership on hold, an option in the account settings.

A fitness club membership is another good example. A $60-per-month membership costs $2 per use if you go every day. But it costs 30 times more if you go once a month.

"If you're already on a subscription, record what your actual use is and you'll probably be surprised," Wang said.

Daily use items: Items you use daily do well in a cost-per-use analysis. Mattresses, coffee makers and computer monitors are examples. If you buy a bigger, better computer monitor that costs $100 more and use it daily for four years, your additional cost per day is 7 cents. On the other hand, infrequently used items get expensive. A $1,000 snowblower you use three times a year for 10 years costs about $33 per use.

Big-ticket items: Consider homes. Many four-person families buy a four-bedroom house, using one bedroom as a guest room. Is that wise? Assume a four-bedroom house costs $75,000 more than a comparable three-bedroom house. And assume the guest room is occupied for 20 days a year. If you own the house for a decade, you essentially paid $375 a night for guests to stay with you. You could have put up your guests in a posh hotel for that. But that ignores factors, such as four-bedroom homes might be easier to sell and might appreciate more. And maybe the extra bedroom is worth it for non-monetary reasons. But the point is to know the cost. The same is true for buying a seven-seat SUV when a four-seat sedan will do most of the time. And what is the cost per use of buying a boat or installing a swimming pool if you can use them for only three months of the year?

Gregory Karp is a personal finance writer for The Morning Call, Allentown, Pa., and author of "Living Rich by Spending Smart." E-mail him at yourmoney@tribune.com.